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AGO 1952 No. 438 - December 15, 1952
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Smith Troy | 1941-1952 | Attorney General of Washington

COUNTIES ‑- REAL ESTATE SALES TAX ‑- PRIORITY OF LIENS‑-PRIORITY OF LIEN OVER PREVIOUS MORTGAGE.

A previously executed and separate mortgage has priority over the lien of the real estate excise tax imposed upon a subsequent sale to another than the mortgagee.

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                                                               December 15, 1952 

Honorable John J. O'Connell
Pierce County Prosecuting Attorney
Pierce County Court House
Tacoma, Washington                                                                                                             Cite as:  AGO 51-53 No. 438

 Dear Sir:

             Basically, you request our opinion upon

             the priority of the real estate sales tax lien over a previous recorded mortgage separate from the sales transaction.

             We conclude that

             the mortgage lien has priority.

                                                                      ANALYSIS

             Chapter 28.45 RCW permits counties to levy an excise tax of not to exceed one per cent of the selling price upon the transfer of interests in real property.  We assume from your question that a mortgage was executed upon certain land and properly recorded.  Then, in a subsequent and separate transaction, the land was sold, with the mortgage still extant, to another than the mortgagee.  (Normally, the sale to the mortgagee would extinguish the lien by merging it with title,Walsh on Mortgages, § 44, 181-184 (1934) which would leave only the tax lien outstanding upon the land.  The sale to the prior mortgagee would no more affect the tax lien than sale to another.)

              [[Orig. Op. Page 2]]

            If the tax upon the sale is not paid, the land is impressed with a lien.  The mortgagor has taxably transferredhis interests in the land, which do not include the interests, whether real or equitable, of the mortgagee.  The selling price which measures the tax includes, however, the amount of the outstanding mortgage.  This gives the only statutory support to the argument that the tax may be uponall interests in the land and thus be prior to a previous mortgage.

             However, RCW 28.45.070 specifically provides that the tax shall be a lien upon the property:

             "from the time of sale until the tax shall have been paid, which lien may be enforced in the manner prescribed for the foreclosure of mortgages."  (Emphasis supplied)

             Such clear language indicates legislative intention that the lien is effective only from the date of sale.

             This coincides with the presumption that liens, even for taxes, take priority as of the date of their attachment.

             "* * * the legislative intention to make taxes a paramount lien displacing prior liens must be plainly expressed, since such a construction will not be favored."  3Cooley on Taxation, § 1240, pp. 2467-2472 (4th Ed. 1924).

             This is the Washington rule,Scandinavian American Bank v. King County, 92 Wash. 650 at 651, 159 Pac. 786 (1916):

             "The state has an undoubted power to create a priority of lien in aid of its taxing power (Carstens & Earles v. Seattle, 84 Wash. 88, 146 Pac. 381) but the general rule is that such priority will not be indulged unless sustained by some positive statute; it will not be sustained by resort to construction."  (Emphasis supplied)

             See also Barlow & Sons v. H. & B. Lumber Co., 153 Wash. 565, 280 Pac. 88 (1929); andHome Owners' Loan Corp. v. Mitchell, 195 Wash. 302 at 308, 81 P. (2d) 268 (1938).  CompareCarstens & Earles v. Seattle, 84 Wash. 88, 146 Pac. 381 (1915).

              [[Orig. Op. Page 3]]

            No language in chapter 28.45 RCW grants such priority to the real estate tax lien.  To the contrary, the only positive language of the statute militates against it and this is consonant with the general presumption.  This controls our conclusion.

 Very truly yours,
SMITH TROY
Attorney General 

JENNINGS P. FELIX
Assistant Attorney General

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